Highway and City Freight Drivers, Dockmen and Helpers, Local Union No. 600 v. Gordon Transports, Inc.

• Decision Date: 20 June 1978
• Docket Number: No. 77-1542,77-1542
• Citation: 576 F.2d 1285
• Parties: 98 L.R.R.M. (BNA) 2349, 84 Lab.Cas. P 10,634 HIGHWAY & CITY FREIGHT DRIVERS, DOCKMEN AND HELPERS, LOCAL UNION NO. 600, a voluntary unincorporated labor organization, Appellant, v. GORDON TRANSPORTS, INC., et al., Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 1285

576 F.2d 1285

98 L.R.R.M. (BNA) 2349, 84 Lab.Cas. P 10,634

HIGHWAY & CITY FREIGHT DRIVERS, DOCKMEN AND HELPERS, LOCAL UNION NO. 600, a voluntary unincorporated labor organization, Appellant, v. GORDON TRANSPORTS, INC., et al., Appellees.

No. 77-1542.

United States Court of Appeals Eighth Circuit.

Submitted Dec. 15, 1977.

Decided May 19, 1978.

Rehearing and Rehearing En Banc Denied June 20, 1978.

Stephen H. Gilmore, St. Louis, Mo., argued, Joseph B. Dickerson, Jr. and Robert A. Crowe, St. Louis, Mo., on briefs, for appellant.

Charles A. Seigel, St. Louis, Mo., argued, Hyman G. Stein, Charles H. Spoehrer and Ned O. Lemkemeier, St. Louis, Mo., on brief, for appellees.

Before LAY and BRIGHT, Circuit Judges, and SCHATZ, ^* District Judge.

LAY, Circuit Judge.

In this case we are asked to decide whether a labor union is a "person" who may file a petition for voluntary bankruptcy under § 4(a) of the Bankruptcy Act, 11 U.S.C. § 22(a). In 1970 Highway and City Freight Drivers, Dockmen and Helpers Local Union No. 600 (hereinafter the Union) engaged in an unlawful strike which resulted in a judgment of approximately six million dollars against it, and in favor of more than 60 motor freight carrier companies. See Motor Carriers Council of St. Louis, Inc. v. Local Union No. 600, 370 F.Supp. 461 (E.D.Mo.1972), aff'd, 486 F.2d 650 (8th Cir. 1973) (liability); Motor Carriers Council of St. Louis, Inc. v. Local Union No. 600, 384 F.Supp. 214 (E.D.Mo.1974), aff'd, 516 F.2d 316 (8th Cir. 1975) (damages).

After filing its voluntary petition the Union was automatically adjudged a bankrupt pursuant to § 18(f) of the Act, 11 U.S.C. § 41(f). Gordon Transports, Incorporated, and 59 other motor carrier companies (the motor carriers) then sought to have the adjudication vacated and the petition dismissed on the ground the Union was not a person for purposes of the Bankruptcy Act. The motor carriers also urged that the Union was not a separate entity independent from the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America (the International) and that therefore the bankruptcy proceedings were improper without the joinder of the International. The bankruptcy court, the Honorable Robert E. Brauer presiding, ruled that the Union was an "association" that came within the Act's definition of a corporation and was, therefore, a person who could file a petition for voluntary bankruptcy. On review the district court, the Honorable H. Kenneth Wangelin presiding, found that a labor union is not a "business oriented entit(y) with powers similar to corporations" and thus neither a corporation nor a person under the Act. The district court also ruled that nothing within the legislative history supported the argument that Congress' intention was to include unions within the Act. The order of the bankruptcy judge was reversed and the voluntary petition in bankruptcy was ordered dismissed. In re Highway & City Freight Drivers Local 600, 432 F.Supp. 1326 (E.D.Mo.1977).

We vacate the judgment of the district court and hold that the Union is a person under the Bankruptcy Act.

Section 1 of the Act, 11 U.S.C. § 1, provides:

The words and phrases used in this title and in proceedings pursuant hereto shall, unless the same be inconsistent with the context, be construed as follows:

(23) "Persons" shall include corporations, except where otherwise specified . . . .

The word corporation is also defined in § 1 of the Act.

(8) "Corporation" shall include all bodies having any of the powers and privileges of private corporations not possessed by individuals or partnerships and shall include partnership associations organized under laws making the capital subscribed alone responsible for the debts of the association, joint-stock companies, unincorporated companies and associations, and any business conducted by a trustee or trustees wherein beneficial interest or ownership is evidenced by certificate or other written instrument . . . .

(Emphasis added).

The issue we face is, therefore, whether the Union is an association which has any of the powers and privileges of private corporations not possessed by individuals or partnerships within the meaning of the Act. We conclude that it is.

The present definition of a corporation under the Act has remained substantially unchanged since the 1926 amendments of the Act. See Act of May 27, 1926, § 1(6), 44 Stat. 662. At that time the word association was generally understood to "signify a body of persons united without a charter, but upon the methods and forms used by incorporated bodies for the prosecution of some common enterprise." Hecht v. Malley, 265 U.S. 144, 157, 44 S.Ct. 462, 467, 68 L.Ed. 949 (1924), quoting 1 Abb.Law Dict. 101 (1879). See also In re Poland Union, 77 F.2d 855, 856 (2d Cir. 1935). The Supreme Court had, in fact, recognized that unions "are, as has been abundantly shown, associations existing under the laws of the United States, of the territories thereof, and of the states of the Union." United Mine Workers v. Coronado Coal Co., 259 U.S. 344, 392, 42 S.Ct. 570, 576, 66 L.Ed. 975 (1922). ¹

It is also evident that under federal law ² the Union, as an association, has powers and privileges of a private corporation not held by an individual or a partnership. In Coronado Coal the Supreme Court held that unincorporated labor unions such as the United Mine Workers were distinct entities suable in federal court. In reaching this result the Court noted that:

Undoubtedly at common law, an unincorporated association of persons was not recognized as having any other character than a partnership in whatever was done, and it could only sue or be sued in the names of its members, and their liability had to be enforced against each member. But the growth and necessities of these great labor organizations have brought affirmative legal recognition of their existence and usefulness and provisions for their protection, which their members have found necessary. . . . They have been given distinct and separate representation and the right to appear to represent union interests in statutory arbitrations, and before official labor boards.

Id. at 385-86, 42 S.Ct. at 574 (citations omitted). ³

Later, in United States v. White, 322 U.S. 694, 64 S.Ct. 1248, 88 L.Ed. 1542 (1944), the Court elaborated on the characteristics of a labor union.

Structurally and functionally, a labor union is an institution which involves more than the private or personal interests of its members. It represents organized, institutional activity as contrasted with wholly individual activity. . . . The union's existence in fact, and for some purposes in law, is as perpetual as that of any corporation, not being dependent upon the life of any member. It normally operates under its own constitution, rules and by-laws which, in controversies between member and union, are often enforced by the courts. The union engages in a multitude of business and other official concerted activities, none of which can be said to be the private undertakings of the members. Duly elected union officers have no authority to do or sanction anything other than that which the union may lawfully do; nor have they authority to act for the members in matters affecting only the individual rights of such members. The union owns separate real and personal property, even though the title may nominally be in the names of its members or trustees.

Id. at 701-02, 64 S.Ct. at 1252 (footnote omitted). ⁴

Thus, under federal law, a union undeniably possesses some of the unique powers or privileges of a private corporation.

Basic principles of statutory construction lend support to a broad construction of the definition of a corporation under § 1(8) of the Act. Section 1(8) uses the word "includes" when setting out the types of organizations that come within the definition rather than the word "means." ⁵ When a statute is phrased in this manner, the fact that the statute does not specifically mention a particular entity (in this case labor unions) does not imply that the entity falls outside of the definition. See Pfizer, Inc. v. Government of India, --- U.S. ----, 98 S.Ct. 584, 587-88, 54 L.Ed.2d 563 (1978); Helvering v. Morgan's, Inc., 293 U.S. 121, 125 n. 1, 55 S.Ct. 60, 79 L.Ed. 232 (1934).

Furthermore, a union is not excluded by the literal language of § 4(a) from filing a voluntary petition in bankruptcy. The section provides that any "person" except municipal, railroad, insurance, and banking corporations and building and loan associations are entitled to the benefits of voluntary bankruptcy. ⁶ In interpreting § 4(a) the Second Circuit noted:

When the words create a general inclusionary category there is greater reason, perhaps, to accept a literal meaning in the absence of any particular purpose which contradicts it. When the statute is couched in terms of an exception, however, the task is somewhat different, for in the case of an exception we can hardly assume that excluding a particular category from a general class was utterly without purpose. If we find that there was a legislative purpose for the general exception which does not fit the narrower exception at issue, a court may justifiably conclude that the exception at issue is without the statute. Thus, the normal rule of construction is that where words of exception are used, they are to be strictly construed to limit the exception.

Israel-British Bank (London) Ltd. v. Federal Deposit Insurance Corp., 536 F.2d 509, 512-13 (2d Cir.), cert. denied, 429 U.S. 978, 97 S.Ct. 486, (1976). ⁷

Contrary to the district court, we find the bankruptcy court's interpretation of the Act is also supported by its legislative history. In its 1898 formulation a corporation was defined as meaning "all bodies having any of the powers and privileges of private corporations not possessed by individuals or partnerships, and shall include limited or other partnership associations...